tv Bloomberg Markets Asia Bloomberg July 4, 2019 11:00pm-12:00am EDT
direction from the u.s. given that it is the july 4 celebration. are moving markets upward, it is in positive territory and if the gains continue, five weeks of consecutive gains, something we haven't seen since january 2018. australia 0.4%. lower.s slightly cutting japan from neutral to underweight, concerns about the
u.s.-china trade war. the yen currently, 107.85. a little flat at the moment. one of the strongest performers in asia over the past three months. hong kong dollar also one to watch. 7.7 a. much flat. -- 778. you much flat. bond yields lower. yields in asia pretty much tracking the u.s.. indonesia, the philippines attracting investors. when it comes to commodities, let's take a look at where gold is. wti currently down 1%. i want to show you this chart. all of the twists. we are talking about yields.
. chinese bonds, seeing much a search -- a surge. first time default in june compared to just one back in may. to put that in perspective, we started to see defaults in 2016 and still low compared to developed markets like the u.s. you are looking at india. big day. >> the focus could switch to india quite quickly. it is budget day. modi'sst after narendra election win. we saw the market move yesterday after we saw that economic survey. we also heard from the government advisor saying they will stick to the budget deficit path.
we saw the market had higher when it comes to the rupee. rupee.r offshore india yields down nine basis points on that fiscal prudence. a signal that we could see some more spending but they will keep the deficit target at 3.4%. that is the last close of course. a look at your first word news, juliette saly joins us from singapore. tte: boris johnson has told a campaign meeting that i split from brussels is key to keeping the u.k. together. he said failure to deliver brexit could split the nation apart. toldgov poll last month tory members would favor brexit even if it meant breaking up european union.
sending syria despite violation of sanctions. iran responded by summoning the british ambassador to explain. the incident comes as european powers struggle to save the he run nuclear deal after president trump walked away from it last year. a $240,000 to the stepson of a former prime minister. aziz was charged with money laundering. film companys reached a settlement with the justice department over claims they financed the wolf wall street movie with 1mdb money. testimony, a person told a judge that a payment was in exchange for a promise that at
least six members of the international olympic committee would vote for rio. global news on air and at to back on twitter. i am juliette saly. this is bloomberg. the number for nonfarm payrolls has been tracking lower. and now see it coming in 120,000 compared to estimates of 160,000. mark cranfield joins us now. that is a great discrepancy. one, why? two, and justifies a rate cut. >> it tells you what traders are thinking rather than economists. it gives traders a chance to say where they think things will go. if they had been backing that up with their position, what they
suggest is that the shock could be the other way around. if the number comes closer to 200,000. of course, street after the july 4 holiday, liquidity will probably be more challenging than usual because people just won't be at their desks. discrepancy, there's a chance we could get some good movement in things like dollar-yen and maybe treasuries as well. >> over the past few days, we have seen yields in europe and other countries drop low zero for the first time. our treasuries next? mark: she hasn't heard of these bond vampires. we used to have one vigilante that scared markets but now we have these vampires that suck yield out from around the world. this week, two-year italian
yields went negative which is extraordinary given the issues they are having with european union and the budget. we have seen greek yields crashing as well. 10-year are now only about 10 basis points above treasuries. it is really a global phenomenon. for people who haven't cut rates, they are probably thinking about cutting rates as well. ande is no yield available, it is driving people into other assets, helping to sustain some of these equity rallies. people are saying, if i can't get any return on my fixed income, i might as well put more money into fixed equities as well. a huge issue for investors around the world, what do you do when so many major bond yields are at zero or have gone negative already? >> thank you, our markets live strategist.
you can follow more on all the stories on our markets live blog. you can get a markets rundown in just one click, commentary and analysis from expert editors. still ahead this hour, chips in smartphones are walloping. more analysis of the latest earnings. haslinda: a trade war. we discussed why it is still on track for its largest weekly gain since february. this is bloomberg. ♪
hanoi has been seen as the beneficiary of the ongoing standoff but trading on the back of huge exports to the u.s.. reporter,asia economy michelle. this is a 180 degree turn. we've been talking about them as a trade war winner. we are used to taking these developments in stride day by day. every headline, every tweet. this latest tariff batch is part of a longer run story in the u.s.. this even predates trump. i was looking at a june 2015 trade case by steel executives, who tried to prevent dumping of steel from producers, including two key ones here, who were being accused of doing shipments through vietnam. haslinda: i'm wondering, from
steele, could that go to other exports like electronics? >> sure. is theely, electronics big story in the region. we have seen data that the electronics cycle is turning down. awaytariffs on china and complications, that could cause some economies to try to push things against economies like vietnam. they have really become the new big deal, certainly happening for a while, certainly something the u.s. and other economies have tried to prevent. today, we saw headlines of the prime minister in vietnam instructing authorities to really crackdown even more to go in and try to make no -- try to make sure no fake maiden vietnam labeling is happening right now. >> let's bring in our guest. from ho chilive
minh city this morning. thanks for joining us. the headline number seems a bit scary. 400% on steel tariffs. i'm wondering, why are markets shrugging this off? >> the headline is a little bit serious but the reality is that this is steel coming from taiwan and south korea being dumped into the u.s. through vietnam. wherent being allowed products come into vietnam and have a very small value add, perhaps none, before being labeled maiden vietnam. the government has been very proactive about making sure this doesn't become a significant problem, and there have been reports that -- there have been reports that these are pointed out the vietnam government. stimulateurse, to domestic production, keeping out
foreign supply and making sure there is a localization rate. manufacturing in electronics and other things. i think that is why the market is shrugging it off. it is just on steel products from overseas. haslinda: could you be underestimating the impact, considering the fact that vietnam trade surplus, we are seeing that growth of the month? risk weinly, it is a are watching closely. not insignificant. number five on the list of countries with a surplus to the u.s.. the only one of those that doesn't have tariffs imposed so far. hanoi, the prime minister and the president signed on perhaps of the agenda
a 13 billion other deal to buy boeing airplanes. on the sideline of the g20 summit in osaka, the prime minister spoke again with large-scale uptick agreements of natural gas. they are seen to be addressing the problem and, for now, that is making trump and his team happy. dialogue.n ongoing >> i want to ask come on the report recently, naming vietnam on the watchlist, that fact into this debate. the ballooning surplus with the u.s.. is that something that investors are confident that the vietnam government can convince the u.s.
that things are under control? >> so far, it has been working. appreciatewhy they the u.s. dollar strength and yuan weakness. it makes the import for raw materials of much of the production cheaper. vietnam has been pointing out regularly to the u.s. that it has been supporting the currency as opposed to artificially weakening it, which is what other countries have been accused of. ,t has been supporting it policies with a 2% valuation, this year with flat and things look fine. gdp growth will be up to 6.7% for the year. interest rates are stable.
pressuresurrently no on the dollar. yvonne: even before these tariffs were happening, we were seeing companies moving production to vietnam. wonder, is there really the labor, the capacity, the infrastructure in place to really become a key supplier in global supply chain? can vietnam be that substitute to china? >> the key here is that none of this is new. 2012had a trade surplus in for the first time in years. the flow has been going on for five or six years now. , ais due to low labor costs large hard-working, industrious, well-educated population. vietnam has a population approaching 100 million people.
costs,ingly, given labor between a third and half of that of china, people are still readily able to be found. they have rolled out the red carpet in terms of tax incentives. production is getting more efficient. amazon is a headline company that spent money on producing inside vietnam. china.eally the story of ups is a well trodden path the value chain through .anufacturing and export haslinda: why would foreign investors want to buy from vietnam? >> direct access for overseas investors is difficult. that is part of the reason we are able to exist here.
of overseeehalf investors. the long-term outlook is strong. we expect the index to have a fair chance of doubling over the next 3-5 years. ignoring the short-term swings from the u.s., the outlook is very strong. there are lots of companies that don't trade very much with free flow problems. the government understands that if the privatization process is to resume, it will liberalize the market further. there's a discussion at the moment at the top levels of government. problems as well as foreign ownership limits and apply rules. the outlook is for the market to become easier to invest for overseas testers, and more liquid, and with a bigger scale and breadth.
haslinda: you mentioned the -- >> you mentioned the data privatization, one of the regulations that have been mentioned. is that something that is on your radar or is there anything else in terms of legislation or regulation coming down the pipeline that you are worried about? >> that is not too relevant for us in the stock organ. -- stock market. most of those big tech companies here are private. it is all about liberalizing the market where we had really focused. the long-term aim to get onto the msci. it thisot achieved year, the government will be looking at what it has to do to get that done. >> lawrence, appreciate your thoughts. i also want to thank our
you are watching "bloomberg markets: asia." topped samsung profits second-quarter after mitts, a smaller than expected drop in operating income after a one-off gain. despite that, lukewarm demand when it came to memory chips and smartphones raised some concerns. our asian tech reporter joins us. were there any surprises?
was thisoday preliminary result of samsung second-quarter earnings. , likelyst estimated apple, it was unidentified but apple paid samsung 800 millions of dollars to deflate business. the order did not meet minimum requirements. today'sng that operating profits show that samsung might report a second-quarter operating profit later this month with like 5.6 or 5.7 trillion won. that is below market expectations by a large margin. i think that comes from the chip --ustry downturn on surprisingly, smartphone sales were not good read the galaxy s
10, the most recent model, it hurt profits as well. like you said, there is so much pressure in the space. what is the outlook for the chip market? market -- theto memory chip market and semiconductor market overall is expecting a gloomy outlook. toause prices are expected continue to fall, the prices will slowly take up. the ongoing trade war is affecting the industry for a long time over there was a truce between china and the u.s. at the g20 meeting last weekend. theysts are still expecting downturn has been dragging on for several months. there are some positive views that chinese chipmakers may
order more memory while american companies are grappling with the huawei ban. the industry would slowly bottom out. japanda: when it comes to curbing exports, with that effect samsung in any way? sohee: it is a really complicated issue. i think the japanese export curve would bring impact samsung and overall tech giants. is highly chain dependent on japanese suppliers at this point. to findis trying hard substitutes. it is really hard to find the local suppliers that will meet the high and material. it will take some time.
shot over the lion city. singapore.0 a.m. in we are keeping an eye on the first weekly decline. we have seen a contraction in exports. numbers signaling more downside to gdp. watching the federal bank. considering easing before that eating in october. inbefore that meeting october. let's get the first word headlines. juliette: greece heads to the polls on sunday with prime minister alexis tsipras
struggling to defend four years of austerity and social ops people -- and social upheaval. another candidate is the favorite with voters like in his message that austerity has failed. 180% debt has ballooned to of gdp. president has ruled himself out of the race to run the imf. he says he is happy with his current role. he was seen as a front runner to succeed christine lagarde at the fund. he worked at the imf in the 1990's. parts of southeastern california and nevada were hit with an earthquake measuring 6.4, with the tremor felt all the way from los angeles to las vegas. there was no report of damage. a.m.uake struck at 10:00
in the desert northeast of l.a. it was the strongest to hit the region in 20 years. the end of an era for one of the disrespectful publications out there. magazine "mad discontinuell selling in stores. global news, 24 hours a day on air and at to act twitter,powered by more than 2700 journalists and analysts in over 120 countries. a big story investors will be watching today. the indian budget, the first since the modi government's decisive reelection. asia get to our southeast economics team leader. the is the first budget for
finance minister. what is she likely to deliver? be a veryoing to interesting afternoon. we are watching closely for the minister's budget speech. we expect her to focus on the growth outlook. sharply inhas grown the first half this year. consumption is quite weak. we are looking for her to address some of those issues. having said that, she doesn't have a lot of room to play with. the budget deficit was forecast this year to be 3.4% of gdp. the market is watching closely. we have got some indications yesterday from one of the key
economic officials in india, the key economic advisor, saying that they will stick to the fiscal consolidation plan. i think that was welcomed pretty much by the bond market. yesterday, the expectation that the budget deficit will probably be close to that 3.4% target. part of that survey was fairly positive to the economy, growth back to 7%. one hint can we get from there -- what hint can we get from it isfor the budget? >> an interesting forecast, cna rebound in gdp growth. a fivegdp go down to year low of 5.8%. i think they are looking for resurgence in private
investment. ae election results, resounding victory for modi. they see it as helping businesses come back and expand operations in the country. of alsothe whole idea making sure the budget deficit remains under control, they don't want the increased borrowing to drive up borrowing costs in the economy that will also help to support private investment. we expect some income tax relief that will help some way to support the consumption that was a big driver of growth. asia team leader.
budget, our next guest says the time is right for the slowdown. senior vice president and economist from dps is saying it will be a balancing act. reforms and the national deficit stay below 3.4% of gdp. that is a big ask. >> absolutely. the deficit target, important to see how they are arriving at numbers. the expenditure had to be scaled back. the markets are looking at the deficit target and assumptions as well. -- if thee markets underlying assumption are that you are getting a lot of gsa revenue, that revenues will go up as well, then i think we have
a problem. i think markets at this point, i domesticre is helptions -- some kind of is required. haslinda: so the markets could be quite forgiving. debt,ms of the growing that is what the bond market is looking for. how big of a problem is that? >> one, if you were to compare the expense -- the capital expenditure from the central government and state governments, the states are spending much more. if you want to have the multiplier effect. we have seen in the past few years that states have been spending more and revenues, there has been slippage. the deficit has been going up you have deficit at about 3.4%.
some of the spending has been pushed out to the public. rate everything together, about 8.5% of borrowing. financial savings for households is not as much. where will this all come from? after the government has borrowed and left, you have the corporate sector. out deal.rowding at this point, i think a lot of potential for the deficit alone, equally important to what is happening on the street. yvonne: you mentioned a little bit about the tax collections. taxre expecting lower
collections, especially gst. how do you think the finance minister will fill the gap to fund these welfare programs without increasing the tax burden on programs here? see taxesar, we did fall short of the estimates. there is some concern there. the monthly data that is coming in, there have been some changes as well in structure that suggest the rupee might not be very strong over the next months as well. i think the balancing act will be, if there are lower tax revenues, to balance it out with higher nontax revenues. divestment -- i had push aheadtment --
with divestment, privatization. you could get a windfall. that, significant revenue, i think it will not be available in the short-term it it has to work its way through and it will take a couple of years before we see more efficient. nontaxmeantime, i think is an option. yvonne: you mentioned that there may not be a need or a full rollout of these reforms. i'm wondering, now that the elections are over, we saw the prime minister come out with isn'ts a decisive win, now the time to actually go hard on structural forms? certainly. , in a lot of groundwork has already been done. a lot of new initiatives focus not only on the rural sector. you have infrastructure programs
, basic things like electricity, sanitation. you also have financial sector reforms. there is sufficient groundwork. i would think, for a start, getting that mechanism up to speed and of course then to follow up with the rural sector in particular it -- in together it there has been -- in particular. given the share of labor employed in agriculture, it is a bit lopsided. important agenda. i would think that the first thing on and would be to tighten the things that have been drawn
billion u.s. dollars. the proceeds are likely to be used to pay down debt. they are also looking for m &o's in asia and china. >> the most important brand in china is budweiser by weight. today, we sell more budweiser in china than the united states. set to go far beyond equities and derivatives trading. the bank said its new plans were expected -- were accepted over the weekend. changesis set to adopt that could see as many as 20,000 employees lose jobs worldwide. haslinda: the board of german lighting company's rum says -- company asram says they are
looking at a takeover. the board says they will recommend that shareholders recommend -- recommend that shareholders accept the offer. osram has struggled since 2013. yvonne: indian markets have just opened for trade. let's go to mumbai. it is budget day today. how are things shaping up? >> so far, so good. marginal gains on expected lines. we are not expecting very sharp moves in the benchmark at least before the presentation of the union budget. marginally in the green. gains we of the four-d have seen. the banking index continues to do well. a word on the indian rupee,
which has continued to strengthen against the u.s. dollar and has continued to climb, now at 68.6. that will continue to be. that will be in focus. haslinda: the budget could have a bearing on some sectors. how are they doing? consumption, which is going to be the focus considering the kinds of slowdown we have seen over the past couple of quarters. we are keeping an eye on discretionary. the realty sector has advanced around 1%. the other sector we are keeping an eye on, the government owned banking sector. the banking index is up around half a percent around with -- have a percent. the usual consumption names will be in the limelight today.
haslinda: thank you. thedard chartered makes bulk of its revenue from asia with china and north asia delivering the largest share. howbill winters talks about he is dealing with the impact of the trade war. bill: i think the period of unbridled globalization which we could argue is part of what characterized the last decade, that was very good for global growth, very good for a global bank like standard chartered, very good for a subset of the population, and it obviously left another sub -- another subset of the population behind, namely the middle class in developed countries. a natural extension of the view that a small population in my country is more important to me
than a large population in another country. that is the world in which we live. >> what does it mean for banks? supply chains have moved. do they come back? bill: it is a reconfiguration. it is always fascinating to pick up the soundbites about china being a force for good in globalization but that appears to be the case? aobalize or -- will china be scaleizer on a global or a super regional scale. south to australia. the china globalization ecosystem is very, very big. it is a big proportion of the world economy. that is our ecosystem, that is where we are operating. the role for standard chartered is to be a very constructive
bridge. as supply chains reconfigure from china, manufacturing to vietnam, korea, india, we want to make sure we are facilitating that flow. there will still be a lot of trades from call it the china sphere to the rest of the world. europe would be well advised to maintain a middle position and that tussle. banke obviously a european . what we want to focus on is how we promote trade within that china sphere but also across that sphere. >> what is the biggest challenge when investors look at china? what do we misunderstand? bill: i'm not euro much we misunderstand. the politics. every country is a political beast. it is just the politics are very different. who is ascendant, who is under
pressure? i think it is difficult to understand. i think there are some simple misconceptions. there is too much debt. that is highly simplistic. there is a lot of debt and china using -- china uses fiscal stimulus. they have a tool in terms of monetary stimulus. they have a large asset ace, the -- asset base, the ability to extract from the population. china has challenges but also tremendous resources. the simple view of china, if you look at how the u.s. or u.k. developed, we had eight booms or -- we had big booms or big busts. china is able to manage in a narrower corridor due to the nature of the political system. was standard chartered
you are watching "bloomberg markets: asia." ofnne: iran is at the center new diplomatic disputes after british special forces seized a supertanker off gibraltar allegedly carrying iranian oil to syria. our editor has the details. take us through what happened and iran's response. >> iran's response, they have basically called in the british ambassador to iran to ask why this happened and say they view this as an illegal act against
their tanker. the tanker was taken off the waters near gibraltar. the reason the british government is giving is that it was in violation of sanctions. the u.s. and government in europe have imposed sanctions on iran. the u.s. has left that accord. a year ago, president trump decided he did not want to deal with it. he has ratcheted up sanctions in recent months and the past year, but particularly in recent months. theinda: what could be implications of this action, especially given growing tensions between the u.s. and iran? jodi: they were really seeing growing tensions before the reaction. the u.s. and iran have been
having an increasing war of words. there are even threats of military action even though president trump has said he would prefer not to go there. german,eally seeing the british, and spanish government that are still signatories to that agreement. they will start leaving uranian enrichment under that agreement. obviously puts that whole agreement in jeopardy. on the one hand, trying to stay in the agreement, negotiate with iran, but on the other hand, having to deal with the fact that the u.s. has been upping the sanctions and putting pressure on its european allies
to do the same. haslinda: having said that, what should we be looking for next with iran? jodi: one thing we should be looking for is syria too, because that is where this was headed and it does not have set. with was also not pleased this action because they say those waters off gibraltar, they actually control. the real question is iran, how do they respond, and how does the u.s. respond? it was independent state in the day in theependence u.s. when this happened. one would imagine this would further increase those tensions. haslinda: jodi snyder, thank you so much for that. a couple of major economic events on our radar. importantght, the all
nonfarm payroll data expecting to show it recovered in june. this is a critical input for the fed officials meeting at the end of july. also, the indian budget at 1:30 p.m. hong kong time. we are already seeing consumer and banking stocks standing to gain from that budget later today. yvonne: investors really like it, from the economic survey, advisors saying we could be seeing growth. they will stick to the fiscal consolidation. we are seeing decent gains here today. interesting to note we are now just less than 1% away from reaching those record highs we saw in early june. the rupee, nine days of gains, the longest we have seen in two years. yields, unchanged.
>> the following is a paid program. the opinions and views expressed do not reflect those of bloomberg lp, its affiliates, or its employees. >> heather: on today's show, we are talking about circulation. if you suffer from pain in your neck, shoulders, or lower back, pains in your hips, knees, or ankles, or pain from arthritis or sports injuries, we will speak to dr. michael ho, inventor of a device that relaxes tense muscles and relieves pain.